Elon Musk’s artificial intelligence start-up, xAI, has raised $6 billion in a series B funding round. Notably, Saudi billionaire Prince Alwaleed bin Talal and his investment company, Kingdom Holding, participated in this round. xAI aims to challenge OpenAI with these new funds.
Investments also came from Valor Equity Partners, Vy Capital, Andreessen Horowitz, Sequoia Capital, and Fidelity Management & Research Company. xAI plans to use the funds to launch its products, build advanced infrastructure, and accelerate research and development.
The company will announce exciting technology updates and new products soon. xAI was valued at $18 billion, before the funding round, which named Musk as the owner of X, formerly Twitter. Saudi Arabia’s Kingdom Holding already holds a substantial stake in X.
Elon Musk launched xAI in July last year amid growing demand for generative AI. The start-up aims to compete with OpenAI, which has about $13 billion in investment from Microsoft. xAI released its Grok-1 generative AI platform in November and followed up with Grok-1.5 in March. According to xAI, Grok-1.5’s performance rivals leading large language models like Google’s Gemini, Anthropic’s Claude, and OpenAI’s GPT. Musk’s vision of “understanding reality” aligns with Grok.
xAI and the Duel with OpenAI
When Grok-1 launched, Musk said xAI would make it open source, challenging OpenAI’s dominance. Musk sued OpenAI and its CEO, Sam Altman, in February, claiming the company abandoned its non-profit mission. OpenAI responded, saying Musk regretted not being part of its success. The generative AI space is highly competitive. This month, OpenAI introduced GPT-4o, a new model that reasons across audio, vision, and text in real-time. Soon, Apple is expected to enter the generative AI market with its own offerings. It plans to reveal its strategy at its annual developers conference in June. Apple’s CEO, Tim Cook, mentioned significant investments in AI, aiming to unlock transformative opportunities for users.
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